Ask Emily: Is It Time for a Baby—or Not?

By Emily Oster

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Dear Emily,

My husband and I are 29. I work in the arts and make about $40,000 a year. My husband left a six-figure job in finance two years ago to work on his start-up, which has funding. He pays himself a $60,000/year salary from his funding but he also has to pay for his own health insurance. I have very mediocre insurance through my company (and adding him would not save us any money).

I would like to have a baby. I am not at all interested in putting my child in a dubious daycare — if I have a child, I’d expect to pay a qualified, nearly constantly available nanny $45,000 a year, which is as much money as I make. I am absolutely not interested in having any kind of subpar care for my child, so it’s likely that I would stay home with the baby since there’s no point in working and not saving any money.

Is now a good time to try to have a child, or should we wait?

Thank you,
A.

A,

I know this wasn’t your question but just to quickly address your second paragraph, which many parents are balking at: there are good day-care options for less than $45,000 a year. Melina Moyer has a nice recent piece on the evidence about day care versus nanny/stay-at-home mom, if you are curious.

But: I actually don’t think it matters much because given your after-tax salary, even if you are paying only $20,000 in child care costs, the monetary benefits of working are small.

What I see in your letter is a very clear outline of the costs of having a child now: you’ll quit your job and will live on your husbands’ somewhat modest salary. What I don’t see is an analysis of the value of waiting. Since it sounds like you will definitely want a kid sometime — given your age, let’s say in the next ten years – you need to think about how you expect things to change if you wait.

It doesn’t sound like you are going to start making a lot more money, so financially it probably makes sense for you to stay home with your child regardless of whether you have a child now or later. Do you expect the start-up to start paying off soon? Would you keep your job even if it was a poor deal financially if you could afford to? These are the question you need to consider.

A final note on the issue of health insurance: the Obamacare health insurance exchanges open for enrollment October 1, with coverage starting January 1, 2014. If you are not working your husband’s income is likely to qualify you for subsidies to your premiums, so the health insurance part of this may be less of a reason to stay at work.

–Emily

Emily,

Do rewards-based systems work for children’s behavior? For instance, if they have a “good” day/week at home and they receive some kind of award – does that actually work as a solution?

Thanks.–Kurt

Kurt,

In theory, rewards based systems are going to have the same issue for kids that they do for adults: by providing sharp incentives on a particular behavior they may be manipulated.

Having said this, in practice there is a tremendous amount of evidence that versions of this work well at generating better behavior. One review article from a few years ago summarizes a number of studies of a “good behavior game” among young child classrooms and finds that rewards for good behavior do work. As with all stuff in parenting, consistency and specificity are key – it is a lot easier for kids to do well if they know what to do.

The opposing view is, of course, that if kids are only doing these behaviors for rewards (or to avoid punishment) then as soon as you take away the rewards they will stop. But I’d argue that habit formation is a crucial part of many of these behaviors. I don’t take my dishes to the sink because I enjoy it, or even because I get a gold star, I just do because I’m in the habit (and partially for cleanliness reasons). If you train this, it will often persist. For a more detailed treatment, I’ll refer you to the important treatise The Berenstain Bears Forget their Manners.

–Emily

Hi Emily,

Is it worth the cost of hiring a nanny that is bilingual and will only speak to your kids in another language? If the answer is yes, which language? If no, why?

–A.W.

A.W.,

It is well known that it’s a lot easier to learn multiple languages as a small child and many people do this if, for example, their native language is not English and they want to make sure the kid learns their enough to speak to their grandparents. In your case, it sounds like your goal is to have your kid leave mine behind in the global economy.

If that’s the case, your best bet is to look 30 years down the road and ask what language, other than English, is likely to dominate. Personally, I’d go with Mandarin, which also has the feature of being very hard to learn later. Do the benefits outweigh the costs? I think you need some macroeconomic forecasting of the Chinese growth rate to answer that one.

Comments (1 of 1)

Was very disappointed that Emily did not encourage A to continue working. While the first few years may be tight, financially, the income potential does increase exponentially if A remains in the work force. A seems to have career ambitions and would like to stay in the work force. It is necessary we foster a culture that supports whatever decision parents choose to make to encourage healthy growth both personally and professionally.